Making engagement letter simpler......

Latest Any Answers

I use a standard engagement letter for all clients (I am a member of Chartered Accountants Ireland). For unincorporated clients, this usually runs to about 8 pages plus an Appendix for a fixed price table for services. Sections covered include client responsibilities, our responsibilities, tax services, other services, money laundering, fees, retention of records, electronic communication, data protection, quality of service/complaints, agreement of terms. I doubt if clients read anything outside of the price on the Appendix! For limited company clients the letter is longer with Companies Acts duties and references.........

I'd prefer to have something as simple as "here is what we will for you" and "here is what you must do as part of the deal". Is it absolutely necessary to make these documents so "legal" looking and difficult to read for clients? I am all for a new approach to this but slightly fearful of not covering myself too.

Replies

I have a 2 page engagement letter that sets out who I'm acting for, when it starts, fees and refers to T&C and a separate schedule of services. My terms & conditions are a shuddering 7 pages (based on ACCA's or similar). And the schedule of services (which says exactly what I'm going to do and what they should do) is between 1 and 4 pages per type of service (e.g. Ltd company accounts & CT is about 4 pages, management accounts etc are about 1 or 2). So for a Ltc co with man accounts, vat and payroll we're talking a short novel.

I doubt my clients read anything other than the 2 pager and probably only because I put that on top and its spaced out so doesn't look too mind-numbingly boring. I'd love to send out 2 pages that would cover everything but then if something goes wrong I'm sure I'd regret it. As I send it all by email it doesn't look quite as daunting as if they had a ream of paper dropping through their letterbox.....

Does anyone know if I'd be covered if I put my T&C (and maybe schedule of services) on my website and merely referred people to it in the initial letter of engagement? That would solve the dilemma..

the banks put their T's & C's on their paperwork when they were selling PPI or interest rate swaps or LIBOR fixes. I'm sure they explained to their customers exactly what was being 'provided'. I'm sure their customers understood perfectly what they were paying for.

Up till now we've put the specific work anticipated as well as work we won't do up front followed by the more standard stuff, starting with what we expect from them, with the important things first.

Standard fee and payment terms are contained in a web based PDF as they apply to all clients and I'll be following the same principle for anything to do with the terms of engagement when I re-do them now the ACCA have released their new versions.

In other words I'll stick all terms common to every client in a web document with a hyperlink to it in the specific one I send the client, this should cut it down to a reasonable length.

I've had quite a few personal dealings with solicitors, surveyors, etc., recently and have been amazed at just how brief their LOFE's have been. Very basic and to the point and very little of the kind of thing that ACCA and ACA expect us to do. I've been ignoring the pro-formas for a while now - I have a 2 sided A4 terms of business which I attach to usually 1-2 pages spelling out what we're going to do. It passed a recent ACCA monitoring visit.

I have an engagement letter (1 and a bit pages), Schedules of Services (for each of personal accounts and tax, company accounts and tax, payroll, vat and enquiry work; and each being 2 to 3 pages) and Terms of Business (2 pages).

For the first year the client receives the engagement letter, Terms of Business and whichever Schedules of Services are relevant.

For subsequent years the client only receives an engagement letter, which refers to the Schedules of Services and Terms of Business already sent. If the assignment changes (e.g. the client becomes Vat registered) then they will also receive a new Schedule.

For most of my clients, and for most years, all they receive from me is the 1 and a bit page engagement letter.

ICAEW , ACCA and other professional bodies haven't produced 'pro-formas' for some years.

I used to chair the pan-professional body working party a few years ago that updated the GUIDANCE re engagement letters for tax related work. We also produced SAMPLES of how the guidance might translate for some practices.

Returning to @sparkey999 the answer is entirely upto you and how much you want to protect yourself and ensure that you can charge additional fees if the work required warrants this. I addressed all such points in the earlier article and in the comments I added in response to questions raised in the discussion thread.